Reckoning

The later 1980s were a period of erratic growth—rapid but unstable. Tigers and sea turtles spurred development throughout the decade: East Asia’s “tiger” economies—Taiwan, Hong Kong, Singapore, and South Korea—paved China’s way in state-led, export-intensive growth. China's “Sea turtles” were the many overseas Chinese who brought capital and knowledge acquired abroad back to their mother country. However, unresolved contradictions lurked in the new political economy of Deng’s China. Frustrations over stalled political reform—enflamed by widespread urban economic grievances over inflation and corruption—erupted in street demonstrations that paralyzed the PRC in the spring of 1989. The Tiananmen crisis would have lasting political repercussions on the cause of democracy—but also unintended economic aftereffects.

Hong Kong Provided China with Capital

Japan Provided Support for Reform

Autocracy and Economic Freedom Brought Growth

Expectations Are the Most Important Growth Factors

Henry Tang

Co-Founder, Committee of 100

Henry S. Tang has a long-standing commitment towards advancing Asian economies through public policy. He has been active as a governor and chairman of the Committee of 100, a non-governmental public policy organization which he founded in 1989, alongside I.M. Pei and Yo-Yo Ma. The committee, composed of prominent Chinese-Americans, addresses issues facing the Chinese community in America and US-China Relations. Mr. Tang has spent 35 years as an investment banker at Salomon Brothers, Lehman Brothers, Prudential, and Jefferies & Co. He is a founding partner of the Carnegie Towers Group, a global strategic investment advisory. His assignments have taken him all over the world. In Asia, he has worked in Singapore, Hong Kong, Japan, Taiwan, and China. He studied Asian and International Affairs at Columbia University before receiving an MBA from Columbia Business School.

More specifically, getting to the heart of the matter, in terms of the boom years, how it happened, I personally feel it’s sort of a very, very large confluence of many different developments and forces that came together. Most important of which was probably the existence of the Chinese Diaspora. But what happened around 1980 is, I started getting phone calls and people saying it’s time for me to say goodbye. And, of course, I was very surprised, I thought maybe something happened to their careers or their companies, and they said no, it wasn’t anything like that. They had been approached by some of their either friends or relatives in Taiwan, that Taiwan at that time was building – the name wasn’t even created yet – a technology development effort, and wound up becoming Xinzhu. And that they were going to be engaged in extremely high level development responsibilities and therefore, it was, more or less, an offer they could not refuse. For some of them, it was the usual sort of things that happened with the family and trauma and American born kids who didn’t want to go back, and all this other sort of thing, and spouses who didn’t agree with it, but that’s also another concern. But, more importantly, on a professional basis, hundreds of people went there, which eventually became thousands. And in that, I think, the development of Xinzhu, which many people now know and realize and see 20, 25 years later, what a economic, scientific and technological behemoth it became. And then, of course, I guess by about ten years later, a little bit beyond that, in the early 90s or so, of course, Taiwan’s activities subsequent to Xinzhu’s development is also legendary, became very active in the development of personal computers and all of the other gadgetry and peripheral equipment that came along with it. And, of course, as economic forces would eventually evolve, it became attractive to outsource into China. And that was also a very, very natural activity because here you had many, I guess you want to call them China expats, who had either lived or grown up in Taiwan and many of whom then subsequently received very, very high-level American educations as part of the repatriation effort from Taiwan to China via some time here in the American educational system. And I think that’s extremely significant because, once again, going back to comparisons with Soviet Union and India and other large countries such as maybe a Brazil or even other developed countries such as a Germany or a Canada or an Australia, how is it that China was able to develop into this boom and yet others were not able to do it?